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My initial reaction - somewhat tentative is this.

When A Ltd "contracts" with B Ltd that contract is void under Cundy v Lindsay (still alive after its narrow escape in Shogun Finance v Hudson). However, A still supplies the goods to C Ltd. C Ltd presumably knows that A believes themselves to be contracting with B.

The third option is a non-starter I think. A has no reason to know anything about D, or care for that matter. If there were a contract we would not strip C of its extra gain, so why strip it of the gain now. If it is a claim in autonomous unjust enrichment C's gain from D is not subtractive from A. C has received a benefit insofar as it has saved the expense inherent in meeting its obligations itself. That is beside the point - A has provided a benefit X; what C does with that benefit is of no interest to A.

The first and second options are where the battle lies. If a free acceptance occurs where the recipient knows a benefit is offered non-gratuitously and where he elects to accept where he could have rejected, C has freely accepted. C could have rejected. It would not have mattered to A - there is no contract of which he would have been in breach. That being the case, the claim is for C's benefit - we may say that is the market value, subject to any subjective devaluation. A can, however, defeat any subjective devaluation by arguing that it was freely accepted. Without more I would say that A gets the market value, subject to a contract price ceiling (A cannot be allowed to improve his position because it was an invalid bad bargain). If C knew about the contract price, maybe we could say C accepted on the basis of the contract price.

Duncan
Dr Duncan Sheehan
Postgraduate Admissions Officer
Norwich Law School
University of East Anglia
Norwich NR4 7TJ
United Kingdom

-----Original Message-----
From: Enrichment - Restitution & Unjust Enrichment Legal Issues Sent: Tuesday, December 09, 2003 3:16 PM
Subject: [RDG:] Quantum of restitution

Measure of restitution. I would be grateful for any thoughts people may have as to the proper measure of restitution that should be claimed in the following factual scenario:

A Ltd has a contract with B Ltd, where A Ltd is to supply B Ltd with certain services. In fact B Ltd does not exist, but would have been a subsidiary to C Ltd and C Ltd is the person for whose benefit B Ltd would have contracted.

Without knowing that B Ltd did not exist, A Ltd supplied the services under the contract. C Ltd received the services and indeed profits from them by being able to discharge its obligations to D Ltd.

Presuming that A has a right against C for the benefit rendered to it, what is the extent of the benefit recoverable?

Is it the contract price for which the services would have been rendered to B?
Is it the market value of the services?
Is it the profit derived by C from its contract with D?

I would be pleased to hear from people with their thoughts.

Kind regards,
Michael Harakis